…as legislators overcome initial opposition to move key revenue laws forward

…weigh concerns over VAT, multiple taxation, Economic Impact

The House of Representatives on Wednesday passed through second reading the four tax reform bills submitted by the President, with no opposition from lawmakers.

The proposed laws include the Nigeria Revenue Service (Establishment) Bill, the Nigeria Tax Bill, the Nigeria Tax Administration Bill, and the Joint Revenue Board (Establishment) Bill.

Originally introduced on October 8, 2024, deliberations on the bills were delayed due to concerns raised by northern leaders and the Nigerian Governors Forum, particularly over the Nigeria Tax Administration Bill, but Speaker Tajudeen Abbas had urged members to consult widely with their constituents before debating the proposals.

Naijablitznews.com reports that ahead of plenary on Wednesday, the four bills were merged into a single document for debate. Despite highlighting potential conflicts with certain constitutional provisions and a few contentious clauses, lawmakers overwhelmingly supported moving the bills forward.

House Minority Leader, Rep. Kingsley Chinda (PDP Rivers, representing minority voices, acknowledged broad support for the reforms but pointed out concerns regarding specific provisions. He emphasized that while the bills aim to restructure the tax system for better revenue generation, the interpretation of certain provisions requires careful review.

The House of Representatives, on Wednesday, continued deliberations on the tax reform bills, with lawmakers expressing mixed reactions to various provisions, including proposed changes to Value Added Tax (VAT) and streamlining of multiple taxes.

Leade of the House, Rep. Julius Ihonvbere commended the President for initiating the reforms, and stated that the bills aim to modernize Nigeria’s tax system, eliminate multiple taxation, enhance revenue collection, and boost economic diversification. He acknowledged opposition to the bills but noted that differing perspectives had strengthened the final proposals.

Ihonvbere highlighted key benefits, including incentives for small businesses, improved revenue generation, and the reduction of tax burdens on low-income earners. He revealed that the reform would consolidate over 60 different taxes into just nine, ensuring quicker resolution of tax disputes within 14 days.

Minority Whip, Rep. Ali Isa (PDP, Gombe) raised concerns over Clause 146 of the Nigeria Tax Bill, which proposes a gradual VAT increase from 7.5% to 10% and later 15%, and cautioned that higher VAT could worsen economic hardship and urged the House to address areas requiring adjustments.

Chairman House Committee on Public Accounts, Rep. Bamidele Salam (PDP, Osun), emphasised that while tax reforms can be challenging, they are necessary for national development. He criticized Nigeria’s complex and duplicative tax laws, arguing that they deter investors and hinder economic growth.

Rep. Stanley Olajide (PDP, Oyo) pointed out that the House regularly establishes new agencies that require funding, making tax reform essential for sustaining government institutions.

Deputy Chief Whip, Rep. Isiaka Ibrahim Ayokunle (APC, Ogun) described the bills as a major step toward tax harmonization but stressed the need for penalties not only for taxpayers who default but also for government agencies failing to implement tax laws effectively.

In his submission, Rep. Sada Soli (APC, Katsina) raised constitutional concerns, particularly regarding Section 141 of the Tax Administration Law, which he said conflicts with existing legislation and creates jurisdictional overlaps. He also criticized ambiguities in VAT and fiscal policies that could overburden taxpayers.

Rep. Babajimi Benson (APC, Lagos) praised the bills for promoting fairness and increasing revenue for states. He also backed the decision to retain key agencies like TETFund, NITDA, and NASENI, stating, “I commend the President for having the guts to push these reforms now.”

Rep. Gboyega Nasiru Isiaka (APC, Ogun) reinforced the House’s commitment to reforms, stating, “From day one, we promised Nigerians a tax overhaul. Our system is outdated, and this is the change we need.”

The debate, which lasted over three hours, showcased a broad consensus on the need for tax reform while highlighting critical areas requiring fine-tuning before the final passage.

During deliberations on the tax reform bills, Rep. Marian Onuoha (APC, Imo) emphasized that the proposed laws aim to create a fairer tax system by placing a heavier burden on high-income earners.

Rep. Abubakar Hassan Fulata raised concerns over the absence of an interpretation clause in three of the four bills, warning that without clear definitions, the laws could be misapplied or exploited by those enforcing them.

Rep. Ademorin Kuye (APC, Lagos) stressed that Nigeria must reform its tax laws to remain globally competitive, while Rep. Leke Abejide (ADP, Kogi) praised President Tinubu for taking decisive steps to rescue the economy from collapse.

Addressing the derivation principle, which had been a contentious issue, Rep. Ahmed Jaha (APC, Borno) insisted that the law must clearly define the specific type of derivation it refers to in order to avoid ambiguity.

Rep. Donald Ojogo (APC, Ondo) highlighted the importance of integrating modern technology into tax administration to curb revenue leakages and boost collection efficiency.

Former House Leader, Rep. Alhassan Ado Doguwa commended lawmakers for their patriotism and Speaker Abbas Tajudeen for allowing thorough consultations before proceeding with the bills. He also praised the President for respecting the legislative process, particularly in retaining key government agencies.

Former Deputy Speaker Rep. Ahmed Idris Wase recalled how the tax reform debate initially caused divisions within the House but credited the Speaker’s diplomacy for maintaining unity. He welcomed the retention of TETFund, arguing that removing it would have harmed the education sector.

In a unanimous decision, the House passed the bills for second reading via a resounding voice vote, with no opposition. The bills have now been referred to the House Committee on Finance, which will conduct a public hearing for further scrutiny and stakeholder engagement.